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3PAR Prefers HP – For the Moment

That's 3PAR's way of telling Dell, which has the right to match HP's 30 bucks and take precedence, to put up or shut up

Late Friday night when sensible people on the East Coast were either in bed or in their cups, 3PAR's board sent out a message saying it had decided that HP's offer Friday of $30 a share was "superior" to the $27 bid 3PAR had accepted from Dell early Friday morning.

It said that it had notified Dell that it intends to terminate their merger agreement in three business days.

That's 3PAR's way of telling Dell, which has the right to match HP's 30 bucks and take precedence, to put up or shut up.

Dell Saturday repeated that it was thinking and would "make our intent known at an appropriate time."

It said after HP went to $2 billion Friday, besting its $1.8 billion early morning bid, that it was assessing what was best for its "investors and customers."

The three days starts Monday and it's widely assumed Dell will run out the clock.

Wall Street apparently believes that a higher bid will be made. 3PAR stock price closed at $32.46 Friday, up from $26.03.

Until the three-day clock runs out the terms of 3PAR's agreement with Dell puts 3PAR's board in the odd position of having to continue to recommend that its stockholders accept Dell's $27 offer and tender their shares.

 

If Dell withdraws, it'll collect a $72 million termination fee consolation prize. If HP forces Dell to pay more than double what it originally though the joint was worth, Dell could be holding the booby prize. It's going to have to sell a lot of 3PAR's utility storage to make an investment of more than 10 times sales make sense. There's also a stigma in grossly overpaying.

 

MarketWatch, the Dow Jones web site, talked to somebody who had talked to ousted HP CEO Mark Hurd about 3PAR before Hurd's August 6 resignation and said he supported the acquisition "but only up to a certain price." Unfortunately he didn't say what that price was.

 

The head of HP's server, storage and networking operation David Donatelli, the guy brought in two years ago from EMC over EMC's legal protest, is widely understood to be spurring the company to buy 3PAR. It would mean denying Dell entry to high-end cloud storage and give HP's $18 billion server and storage business a certain cachet - even a push - perhaps.

 

Clouds are only worth $3.5 billion right now according to IDC.

 

Quoting industry analyst Rob Enderle, MarketWatch wonders what happens if HP's next CEO doesn't like the deal.

More Stories By Maureen O'Gara

Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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